Balancing the Accounts

After the data are collected and compiled, it is necessary to balance the SAM table.

Balancing is accomplished by making adjustments in the foriegn trade and capital accounts. This is done by the software during the model building process.

Balancing of households can serve as an example. Households receive income from industries and institutions. With this income, households buy goods and services, pay taxes, and save for the future. We have information about income, consumption, and tax payments. Savings is the difference between income and spending and serves as a balancing element. Savings can be either positive or negative. Negative savings implies that the household category spent more than it earned that year - by withdrawing from household capital stocks or borrowing from financial Institutions.

Other balancing elements work similarly. The difference between government income and spending is a surplus or deficit.